1 eFX Daily colour

1.1 FX Spot

1.1.1 Overview

(Feb-14) Asian equities rose due to US-Russia talks, sparking hopes for an end to the war in Ukraine and improving prospects for Chinese markets. This boosted risk sentiment, with European stock index futures and S&P 500 contracts advancing despite higher-than-expected US inflation figures. Yesterday, the euro strengthened 0.79% against the dollar, now trading at 1.0469 and the pound strengthened 0.96%, now trading 1.2571, as market sentiment improved.

Oil prices declined, speculating eased risks to Russian supply, while shares of aluminum producer United Co Rusal International PJSC surged in Hong Kong. However, Asian shipping stocks fell on concerns about dropping freight rates amid easing geopolitical tensions.

  • OIL trades at $75.42 per barrel.

The dollar index (DXY) ticked lower as investors awaited clarity on possible reciprocal tariffs. President Trump agreed with President Putin to negotiate an end to the Ukraine war, surprising European allies. The market has adjusted bets on US rate cuts, now projecting a single reduction in December.

  • DXY trades at 106.98, a drop of about 0.07% from the open px.

Gold held its rally, nearing its record high.

  • Gold trades at 2933.30, just below its all time high of 2942.68.

The rand, after closing higher for 3 straight days has regained ground at the back of boosted risk sentiments, which saw ZAR close lower yesterday.

  • USDZAR opened at 18.4914, below the 18.60 pivot level which signals easing pressure of the local currency.

Against the crosses:

  • EURZAR trades at 19.2844
  • GBPZAR trades at 23.1594

1.1.2 US

(Feb-06) US Jobless claims rose by 11K to 219K for the week ending February 1, staying relatively low. This level is consistent with pre-Covid figures, and private employment data indicates strong hiring in January. However, despite a calm January, several major companies have announced staff reductions for early February, hinting that the quiet period may be short-lived. USDZAR saw a slight rally after this to a low of 18.5740 on a 15min window.

(Feb-10) The dollar made some inroads on a daily basis, now trading 108.19 vs friday’s close of 108.09. Gold reached a record high of 2911.04$/oz due to President Donald Trump’s plan for steel and aluminum import tariffs, causing market disruption. Both the dollar and gold rose as demand for safe-haven assets increased amid the trade threats.

(Feb-11) The risk of further tariffs still has room to boost the dollar, which has been on a more bearish trend so far this year.

(Feb-12) The market is closely watching the upcoming US CPI data at 15:30 SAST.

(Feb-13) CPI print yesterday supported FEDs decision to hold rates steady and the general talks between US and Rassia to end the war has boosted risk sentiments.


1.1.3 SA

(Feb-10) There has been a fallout in relations between South Africa (SA) and the United States (US) following the introduction of the land expropriation act. Despite efforts by SA to clarify the act and provide accurate information to the US, the US has decided to halt all aid to SA while an investigation is ongoing. This decision has negatively impacted the Rand, which has lost some of its recent gains against the USD. The ZAR, which saw a low at 18.32 last Friday (07 Feb), and we opened today trading above 18.60, which is the ZAR under pressure region. Additionally, the African Growth and Opportunity Act (AGOA) is now at risk, further straining economic relations between the two countries.

  • ZAR has since made some gains, now trading +/- 18.50 lvls, signalling that the market is not yet too worried about these developments.

1.1.3.1 eFX Volumes

  • Overall volumes

(Feb-10) On Friday (07-Feb) we saw a turn from balance or net short USDZAR position to being net long USDZAR from clients. (*) This is not surprising given the recent growing tensions between SA and the US.

(Feb-11) Client remain net-long USDZAR despite the Rand showing some strength in yesterdays session.

(Feb-12) Continued pull-back on volumes, with yesterdays volumes being 15% lower than recent ADV.

(Feb-12) Volumes improved slightly yesterday, as the US CPI come out higher than expected.

  • Price to volumes

(Feb-10) Latest implied topside is 18.65 but we could go higher if there is not indication of a de-escalation between SA and the US.

(Feb-11) ZAR has stabilized at the 60-DMA of 18.4439.

(Feb-12) New implied topside at 18.6750 with associated bottom at 18.40. US CPI data is critical today, market seems convinced that we will end the day trading higher.

(Feb-13) Clients ended yesterday being net-short ZAR: - Range for today: 18.60 - 18.30.

  • Liquidity hours across currency pairs
  • Currency positions

(Feb-10) Clients are now net-long USDZAR.

(Feb-11) We see continued net-long positions in ZAR.

1.1.3.2 USDZAR levels

(Feb-10) We saw the market gab in the early morning and ZAR gained some lost ground now trading at 18.41.

(Feb-11) From above, it is evident that the move lower in ZAR ended on the 6th of Feb, after that, we see ZAR range trading, without an significant move. This is a clear demonstration that the market is in a “wait and see” environment and is not ignoring the recent developments.

  • It would be premature for now to think ZAR will continue trading lower, range trading seems to be the most likely scenario and a tight range would be 18.60 - 18.35.
  • Volume weighted price for ZAR remains at 18.70.

(Feb-12) New implied topside at 18.6750 with associated bottom at 18.40. The Rand may struggle to make inroads against USD today, unless US CPI surprises. The market is expecting a general cool down in CPI and a confirmation of whether the proposed tariffs have an inflationary impact.

(Feb-13) US Inflation print sees US-Russia talks to end war and thus has boosted risk sentiments.

  • Range for today: 18.60 - 18.30

(Feb-14) ZAR not showing any trend for now: - We now await for the Budget speech next week. - JSE Top 40 hits all time high of 81078.


1.1.3.3 USDZAR spreads

(Feb-10) ZAR benefits from:

  • Gold hits all time high of 2911.04
  • JSE Top 40 also trades record high at 80139.26
  • DXY trades lower compared to open. We note however that USD has made some inroads given Friday’s close was 108.04 and we were trading higher than that today.

(Feb-11) ZAR ends the day slightly stronger at 18.44 vs open at 18.4486. Spreads continue to be elevated but today we saw some moderation, perhaps at the back of reduced volumes seen today.

(Feb-12) Near term Fed cut fades as inflation prints higher than expected. Core CPI, which excludes food and energy costs, increased 0.4% in January after a 0.2% advance in December, supporting the Federal Reserve’s cautious approach to lowering interest rates. Additionally, policymakers are waiting for more details on President Donald Trump’s policies, especially tariffs, which are raising consumer inflation expectations.

  • We saw USD strengthen across the board after CPI print.

(Feb-13) A move lower for ZAR seems likely today at the back of boosted risk sentiments. - Boosted risk sentiments got cancelled after news that our President was in talk with lawmakers. This saw us move from trading at 18.46 to a high of 18.6073. - Nonetheless, we are still trading +/- 18.50.


1.1.4 Key events this week:

  • Eurozone industrial production, Thursday
  • Norges Bank Governor Ida Wolden Bache gives annual address, Thursday
  • Eurozone GDP, Friday

1.2 FX Volatility Update

1.2.1 Update

By Thuto Mukena - Institutional Sales Specialist (Feb-14)

  • Overview

The U.S. tariffs journey continues, with Trump signing an executive order on reciprocal tariffs in yesterday’s late session. However, implementation is not immediate, as he signaled a willingness to lower tariffs if trade partners remove barriers restricting U.S. exports. Plans for the anticipated 25% duties on steel and aluminum imports remain set for next month. Markets showed little concern, as Trump’s openness to negotiations tempered risk sentiment. The Rand capitalized on this, couple with Ramaphosa’s re-iterating that SA won’t be bullied saw the ZAR reverse some of the week’s losses to close firmer at R18.4824/$. Local implied vols moved lower in tandem, with 1-week USD/ZAR implied vol declining 0.72 vol points to 11.67%.

  • EM & G10

U.S. PPI surprised to the upside at 3.5% y/y vs. 3.2% consensus, reinforcing market skepticism over a Fed rate cuts in H1. However, Trump’s tariff headlines were the primary driver of risk conditions in the latter session, leading to a broad softening in implied vols across both G10 and EM. GBP/USD 1-week implied vol led the decline, closing 50bps lower. In EM, USD/ZAR 1-week implied vol trailed behind USD/TRY, with most pairs tracking spot moves.


1.3 Africa

1.3.1 Update

By sizwe Mfayela - Institutional Sales Specialist (Feb-14)

  • Egypt

    • IMF will consider Egypt’s Resilience and Sustainability Facility request at the same time when the IMF conducts the country’s fourth loan program review.
  • Kenya

    • Kenya widened its 2024/25 and 2025/26 fiscal year budget deficit estimates to 4.9% and 4.3% of GDP, respectively.
  • Ivory Coast

    • Ivory Coast started negotiations with Eni SpA over a new exploration block.
  • Nigeria

    • Nigeria’s January crude oil production rose to an average of 1.54mio bpd, up from 1.48mio bpd in Dec.
    • The Nigerian parliament approved President Tinubu’s NGN 54.99trio ($36.4bio) budget for the 2025 fiscal year, which is 9% higher from the NGN 49.7trio proposed in December. The government has also made a $200mio provision to fill the funding gap created by the US aid suspension.
  • Rwanda

    • The Rwanda central bank left interest rates unchanged at 6.5% for the second MPC meeting in a row as it sees inflation remaining sticky in the near term, with 2025 inflation estimated to average 6.5%.
  • Senegal

    • Senegal is in conversation with the IMF to secure a new program that is aimed to commence in June this year. the country aims to extend debt maturities and do debt swaps in efforts to reduce the debt to GDP ratio from almost 100% to around 70% of GDP in the next few years.
  • Zimbabwe

    • The IMF is engaging Zimbabwe on a staff-monitored program following a trip to the country from 30 Jan to 13 Feb to initiate discussions on the key parameters of the program. Zimbabwe currently has $21bio of external debt it defaulted on.
  • Eurobonds

    • Another strong session for SSA credit with decent volume trading overall.
  • NGERIA

    • A couple real money accounts stepped in to sell into what was a very robust local bid, and near the end of the day that local bid felt closer to filled, but street dealers were left short paper, and that maintained a bid tone to the curve.
  • ANGOL: Locals sold into ETF and street bids

  • IVYCST: Flows were relatively light, but overall turned two-way, with the bid for the $ bonds on the curve going softer.

  • KENINT: Some fiscal-related headlines yesterday but flows were muted, with locals net sellers of risk to add to the real money account selling.

  • SENEGL: Was very much in price discovery in a 3pt range since the headlines hit on Wednesday as bid and offers felt very skittish, forcing swift repricing on each print. Overall, SENEGL underperformed on the day with the curve bear flattening.

  • SOAF: An active session with headlines keeping flows on the curve two-way. US PPI came out higher than expected - after a higher-than-consensus CPI print yesterday - but that softened the bid only for a split second. Real money and ETFs were net buyers of risk, whilst there was selling from the street. Long-end continued to trade better, with front-end bonds catching a bid.

1.3.2 Economic data

Economic data releases